German reporting delay reveals AIFMD readiness issues

BaFin’s postponement of the Annex IV reporting date shows that regulators may not be prepared to handle the information they are requesting.

The German Financial Supervisory Authority, BaFin, has updated its reporting obligations for both managers and funds under the Alternative Investment Fund Managers Directive (AIFMD), in effect postponing the first Annex IV reporting date for managers with German operations. The delay is a result of technical issues with a reporting system hosted by the European Securities and Market Authority (ESMA). The first reporting date is now expected to be in May 2015.

The technical difficulties at ESMA highlight the complexity of the AIFMD reporting requirements, in that regulators may not be fully prepared to accept the mass amounts of information they are requesting, noted one head of compliance at an EU-based fund administration firm that handles AIFMD reporting.

“We don’t think the regulators are really ready to take that on,” he said in a call with pfm.

The delay may provide slight relief to those marketing to German investors, but the postponement won’t significantly affect the reporting process in general. When a firm registers with BaFin, it will determine how many quarters it will need to report come May, with some managers needing to file separate reports for the past three quarters.

The Annex IV transparency reporting requirements represent a major challenge for fund managers. All authorized and registered AIFMs are required to periodically report to their local regulators on each AIF they manage or market within the EU. The frequency and the content of the reporting depends on a number of factors, including assets under management and the extent to which leverage is used.